Encana sells 50% Canadian gas stake to PetroChina for $5.5bn

10 February 2011 04:42[Source: ICIS news]

SINGAPORE (ICIS)--Gas producer Encana has inked a deal to sell half of its interest in a shale gas project in Canada to Chinese state-owned oil refiner PetroChina for Canadian dollar (C$) 5.4bn ($5.5bn), the company said late on Wednesday.

The agreement would see PetroChina acquiring a 50% stake in Encana's Cutbank Ridge business assets in British Columbia and Alberta, Encana said in a statement.

The deal came after nine months of talks, the Canadian firm said.

PetroChina's acquisition of the Encana assets would be the largest Chinese investment in a foreign natural gas asset, according to media reports.

The 50:50 joint venture with PetroChina would grow natural gas production from the Cutbank Ridge area, Encana said.

Encana's Cutbank Ridge assets consist of 635,000 net acres of land spanning northeast British Columbia and northwest Alberta, allowing it to produce 255 million cubic feet equivalent per day from proved reserves of about 1 trillion cubic feet, the firm said.

The transaction is subject to regulatory approvals by the Canadian and Chinese authorities, it added.

Shares of PetroChina dropped by 1.9% to Hong Kong dollar (HK$) 10.36 ($1.33) on the Hong Kong Stock Exchange on Thursday following the announcement.